Just Eat's full-year revenue and earnings surge

Just Eat’s 2016 revenue and earnings surged as it seeks to capture further share of the online food delivery market.

Revenues surged 52% in 2016 to £375.7m, compared to last year, and were up 46% on a like-for-like basis, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 93% to £115.3m.

This resulted in a 164% increase in pre-tax profit of £91.3m.

The underlying EBITDA margin rose 700 basis points to 31% and the basic earnings per share increased 182% to 10.7p.

FTSE 250 listed Just Eat said that it aims to capture further share of the £23.1bn of delivered food ordered in its markets and that in 2017, despite more investment, it expects material growth in both revenues and underlying EBITDA of between £480-495m and £157-163m, respectively.

The strong results were due to a 42% rise in orders to 136.4m, or up 36% on a like-for-like basis, processed orders worth over £2.5bn for Just Eat’s restaurant partners and a 31% increase in active users to 17.6m.

More than 50% of Just Eat’s UK orders were processed through Orderpad, its tablet-based order platform, ahead of the company's target to have a third of UK orders processed through the app by March.

Last year, the company bought businesses in Italy, Spain and Mexico as part of its overseas expansion strategy and in December 2016 it said it will buy SkipTheDishes in Canada and Hungryhouse in the UK, subject to approval by the Competition and Markets Authority.

Chief executive David Buttress said: "We continue to see strong growth in the UK, adding materially more revenues in absolute terms than the year before. Our international businesses also go from strength to strength; having become profitable in aggregate during the year, they continue to grow rapidly and now represent over one-third of group revenues.

“2016 was an important year operationally, positioning the business very positively for the future. We continued to invest in our technology, brand and people to expand the choice we offer consumers and the benefits we deliver to our restaurant partners. Our markets remain relatively under-penetrated, meaning there is considerable runway to generate sustainably profitable growth across the business.”

Just Eat has not recommended a dividend since it floated on the London Stock Exchange in April 2014 as it said, in order to deliver longer-term value, it intends to retain any earnings to invest in development and expansion opportunities.

George Salmon, equity analyst at Hargreaves Lansdown, said: “A 42% increase in orders, combined with higher margins in all divisions, has helped annual profits almost double at Just Eat, sending the shares up 7.3%. The group says it will be looking to continue its international expansion, with more bolt-on acquisitions likely. These results, backed up by the group’s confidence it can grow earnings strongly again next year, will surely only whet the appetite of any interested investors.”

While Joshua Owen, a trader at Ayondo Markets, said that Just Eat’s shares have “once again bounced off 500p which could be seen as a support level, however it has found resistance around 560p in the past. With the company still on the lookout for a new CEO, following the exit of its former chief, I expect we’ll see further price movement once an appointment is made”.

Shares in Just Eat were up 6.27% to 550.50p at 1314 GMT.